BDO Pays $40 Million to Settle Stanford Ponzi Investor Suit

May 29, 2015
By David Lee
DALLAS (CN) – Accounting giant BDO USA will pay $40 million to settle claims it knowingly participated in R. Allen Stanford’s $7 billion Ponzi scheme.
Settlement terms were not disclosed in the May 15 federal court filing, in which BDO denied wrongdoing. The company said it agreed to pay the money to save “time and energy.”
The Official Stanford Investors Committee sued the company in 2012, claiming it repeatedly issued unqualified audit opinions for Stanford’s annual financial statements that were critical to Stanford’s apparent success.
Stanford was convicted in 2012 in Houston of selling phony certificates of deposit. He is serving 110 years in federal prison.
“BDO Seidman was never the auditor of Stanford International Bank (Ltd.), the entity where Robert Allen Stanford committed his fraud,” the company said in a statement Thursday. “BDO audited an affiliated company whose financial statements are not alleged by plaintiffs to have contained any material misstatements. However, after almost four years of litigation and the likelihood of more to come, this settlement makes the most sense for our partnership given our relevant insurance coverage and the costs, as well as the loss of time and energy, associated with continuing this case.”
Plaintiffs’ attorney Edward Valdespino, with Strasburger & Price in San Antonio, said the previous largest award for Stanford Ponzi victims was $5 million.
“It’s really the first significant settlement for the victims after six years,” he told the San Antonio Express-News. “In the scheme of things, it’s a small amount for each individual investor, but this is one of many lawsuits out there.”
The plaintiffs claimed BDO USA played a significant role in weakening banking laws in Antigua, where Stanford based his Ponzi scheme.
When Antigua came under increased scrutiny from foreign regulators, Stanford formed a task force to rewrite the country’s banking laws. The task force succeeded in weakening regulations, and in effectively eliminating the Stanford bank’s Antiguan competitors, making Stanford the country’s de facto offshore banking regulator.
“The smashing success of the Stanford task force and its misleading regulatory ‘reforms’ were rooted in its exclusive nine-person membership,” the complaint stated. “Every firm represented on the Task Force provided crucial services to Stanford Financial Group, and every individual member of the Task Force was personally appointed by Stanford himself. … BDO USA’s partners and associates comprised nearly half of the Stanford Task Force’s members, more than any other firm represented on the Task Force.”
The key aim of the task force was to amend Antigua’s Money Laundering Act to ensure that “fraud” and “false accounting” were not included as violations, investors said.
BDO USA allegedly had some of the most important responsibilities for this, reviewing and advising on Antigua’s banking laws, and making recommendations to Antigua’s regulatory authorities, including procedures for supervising and examining international banks.
The settlement comes three days after New Orleans-based law firm Adams & Reese and Baton Rouge-based Breazeale Sachse & Wilson, among others, agreed to pay Stanford’s court-appointed receiver $5 million to settle claims they referred clients to the scheme and gave fake opinions to Antiguan banking authorities.

From Courthouse News.

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Twin Peaks Former Franchisee Blamed for Waco Shootout

May 29, 2015
By David Lee
DALLAS (CN) – The Twin Peaks restaurant chain blames its former Waco franchisee for damaging its brand and reputation by asking police to leave before a deadly shootout between rival biker gangs.
Dallas-based Twin Restaurant Franchise sued Chalak TP Waco LLC in Dallas County Court on Wednesday.
The May 17 shooting at the Waco restaurant left nine dead and at least 18 wounded.
Waco police have been highly critical of the restaurant’s local management for being uncooperative leading up to the shooting. Several armed police officers were in the restaurant’s parking lot in anticipation of trouble and returned fire when they were shot at.
The corporation, which touts itself as the “ultimate sports lodge,” sells comfort food and cold beer served by scantily clad “Girl Next Door” waitresses, according to its website. It has more than 70 outlets in 23 states.
In its lawsuit, the corporation said the shooting “could have been much worse” if not for “the brave actions” of Waco police and other law enforcement.
“Three days prior to the incident, franchisee agreed in a telephone call with franchisor to verify and enforce certain important priorities of Twin Peaks National, including implementing proper security measures to ensure the safety of the Waco restaurant’s guests and team members during the event,” the complaint states.
“Franchisor stressed that franchisee should hold the safety of the guests, the community of Waco, and the Twin Peaks brand in the highest regard. Lastly, franchisor emphasized that responsible alcohol service should be monitored by franchisee and ensure that management presence is felt by guests.”
The corporation says that Chalak assured it that the restaurant was “100 percent fully prepared” for the bikers and that a “strong plan” was in place.
But it claims the franchisee’s management “chose to ignore” the warnings and advice from the corporation and police.
“In fact, upon information and belief, franchisee management asked or directed Waco law enforcement to leave the premises immediately prior to the event,” the complaint states.
Twin Peaks says it terminated the franchise agreement one day after the shooting, when the city shut down the restaurant and the Texas Alcoholic Beverage Commission suspended its alcohol license.
“The termination highlights Twin Peaks National’s continuing commitment to providing a safe and friendly environment for our guests,” the complaint states. “Twin Peaks will always be grateful to the officers who risked their lives in Waco to protect the public.”
Twin Peaks says the closure for public safety reasons and conduct that “materially impairs the goodwill” of the brand is grounds for termination under its agreement.
Twin Peaks spokesman Rick Van Warner declined to comment on the lawsuit Thursday evening.
“At this time, it would be inappropriate to comment on pending litigation,” he said.
Twin Peaks seeks a declaration that it is entitled to terminate the franchise agreement. It is represented by James D. Shields in Addison.
A neighboring business, Don Carlos Restaurant, sued Twin Peaks and its former franchisee on May 21 in Dallas County Court over lost business, claiming they “disregarded basic common sense and ordinary prudence” by inviting the armed rival gang members to a meeting where alcohol was served.

From Courthouse News.

Stanford Ponzi Receiver Demands State Department, Customs Records

May 25, 2015
By David Lee
DALLAS (CN) – The receiver for R. Allen Stanford’s $7 billion Ponzi scheme demands documents from the State Department and Customs as he hunts for $16.4 million in fraudulent transfers.
Ralph Janvey filed motions to compel the two agencies to deliver records on forrmer Stanford insiders David Miguel Nanes and wife Hasibe Elizabeth Ancona. His May 21 motion in Federal Court seeks their passport records and any contact information on file.
Stanford was convicted in 2012 in Houston of selling phony certificates of deposit. He is serving 110 years in federal prison.
“The Receiver believes that Mr. Nanes and Ms. Ancona have both possession and knowledge of the location of several million dollars that Mr. Nanes and his companies received as fraudulent transfers from the Stanford Ponzi scheme,” the 20-page motion to compel the State Department states. “Indeed, the receiver has a judgment against Mr. Nanes’s company, Wealth Management Services, Ltd., in a separate lawsuit for over $9.8 million in fraudulent transfers.”
Janvey said Nanes and his shell companies were paid more than $16.4 million for work in furtherance of the Ponzi scheme. He says the subpoena is necessary to litigate three lawsuits the receivership has filed against Nanes and his companies.
Janvey said Nanes has taken steps to make sure he is not found, including using Russia-based Internet service and multiple mail-drop boxes to get mail. Nanes’ attorney in the lawsuits claims to be unaware of his whereabouts.
The State Department’s objections to the request were late and unpersuasive, Janvey said.
“Though the Receiver’s subpoena was properly served on March 6, 2015, the Department failed to object or otherwise respond prior to the March 19, 2015 deadline set forth in the subpoena,” the motion states. “On April 14, 2015, the Department belatedly served the Receiver with written objections on four grounds: (1) disclosure is prohibited under the Privacy Act, (2) disclosure is prohibited under the Immigration and Nationality Act, (3) disclosure would expend Department resources for purposes other than the conduct of official business, and (4) disclosure would reveal information protected by privileges available under federal or state statutory, constitutional, or common law.”
Janvey has filed approximately 50 lawsuits against Stanford money recipients since his appointment, according to the Courthouse News database.
His targets have included the Tiger Woods Foundation , the Miami Heat, Texas A&M University, the University of Miami, the PGA Tour and the ATP Tour.
In the first such lawsuit to go to trial, a federal jury in February ordered former Ambassador to Ecuador Peter Romero to return more than $700,000 in fraudulent transfers.
Janvey claimed Romero – a former member of the Stanford International Advisory Board – accepted payments from at least four Stanford entities from 2004 to 2009.
Two weeks ago, a pair of Louisiana law firms agreed to pay $5 million to settle claims they referred clients to the scheme and gave fake opinions to Antiguan banking authorities.
Janvey had sued New Orleans-based Adams & Reese and Baton Rouge-based Breazeale Sachse & Wilson in 2012 for negligence, breach of fiduciary duty, aiding and abetting, one year after a proposed class of Stanford investors sued.
In his demand for records, Janvey is represented by Kevin Sandler, with Baker Botts in Austin.

From Courthouse News.

First Lawsuit Filed in Biker-Gang Shootout By Neighboring Restaurant

May 22, 2015
By David Lee
DALLAS (CN) – A neighboring restaurant has filed the first lawsuit against the Twin Peaks restaurant in Waco where a deadly shootout between rival biker gangs broke out on Sunday.
Don Carlos Restaurant and Waco-based franchisee DC Waco Restaurant, Inc. sued Peaktastic Beverage, LLC, which does business as Twin Peaks Restaurant, Addison-based corporate parent Front Burner Restaurants GP, LLC, and Twin Restaurant Investment Co., LLC in county court on Thursday.
The plaintiff claims Twin Peaks “disregarded basic common sense and ordinary prudence” by inviting the armed rival gang members to a meeting where alcohol was served.
“Twin Peaks has been repeatedly warned by law enforcement that such meetings were not wise, and that violence could likely result,” the eight-page complaint states. “This was part of a nationwide program by the corporate franchisor that encouraged such events. Because of decisions that defy common sense, not only has the Twin Peaks lost its liquor license and franchise rights, but nine people are dead and at least 18 are wounded.”
The plaintiff argues it has suffered “as further fallout from these imprudent and unreasonable decisions.” It has yet to open since the shootout, saying police closed businesses immediately surrounding Twin Peaks.
“Patrons of plaintiff’s place of business were trapped inside the establishment as thousands of bullet rounds were fired by law enforcement officials and gang members,” the complaint states. “Law enforcement agents used plaintiff’s porch and surrounding walls to protect themselves from incoming fire. At least four cars in the parking lot of plaintiff’s place of business now have multiple bullet holes in them.”
Waco police have also criticised the Twin Peaks’ Waco management for being uncooperative leading up to the shooting. Several armed police officers were present in the restaurant’s parking lot in anticipation of trouble.
The plaintiff says the Twin Peaks location is a “known destination” for motorcycle clubs and gangs due to its sponsored events.
“Twin Peaks, through its operating partner, Jay Patel, hosted a special event on Sunday, May 17, 2015, for the biker clientele deemed the ‘Texas Region 1 Confederation of Clubs and Independents Meeting,'” the complaint states. “This meeting was promoted by Twin Peaks through targeted advertisements, including photos of scantily-clad dressed women holding various firearms.”
Twin Peaks franchisor spokesman Rick Van Warner declined to comment on the lawsuit.
“Since we have yet to be served and have not seen lawsuit, it would be inappropriate to speculate at this time,” Van Warner told Courthouse News on Thursday.
Touting itself as the “ultimate sports lodge,” Twin Peaks sells comfort food and cold beer served by scantily-clad “Girl Next Door” waitresses, according to its website.
It operates over 70 locations in 23 states.
Don Carlos Restaurant seeks over $1 million in actual damages in lost profits and punitive damages for negligence and gross negligence. It is represented by Anthony G. Buzbee in Houston.

From Courthouse News.

Tulsa D.A. Recuses Himself From Sheriff’s Deparment Probe

May 21, 2015
David Lee
TULSA (CN) – The Tulsa County District Attorney recused himself from investigating the sheriff’s office, whose reserve deputy killed an unarmed black man, mistaking his own gun for a Taser.
District Attorney Steve Kunzweiler will be replaced by Okmulgee County District Attorney Rob Barris because of “perceived conflicts of interest,” Oklahoma Attorney General Scott Pruitt said.
Kunzweiler’s office charged reserve deputy Robert C. Bates, 73, with second-degree manslaughter involving culpable negligence on April 13 and is still in charge of that prosecution.
A body camera video shows Bates shooting and killing Eric Courtney Harris, 44, during an April 2 traffic stop.
Harris is shown running away from deputies as they pull up to his vehicle. He is chased down, held to the ground by several deputies and a single gunshot is heard.
Bates immediately apologizes as Harris screams that he has been shot.
As Bates lies on the ground screaming that he is losing his breath, an officer says, ” Fuck your breath .”
Weeks after the killing, Tulsa County Sheriff Stanley Glanz’s second-in-command – Undersheriff Tim Albin – resigned upon the release of an internal memo indicating he demanded preferential treatment for Bates in completing required training.
“Because the Tulsa County District Attorney’s Office has historically provided representation to the Tulsa County Sheriff’s Office on a number of civil litigation matters, I am concerned that there could be a perception that my office might have a conflict in directing such an investigation into the internal affairs of the Tulsa County Sheriff’s Office,” Kunzweiler said Monday in a statement.
“In order to protect the integrity of the investigative process and to assure the objectivity of any decisions which may flow from that investigative process, I believe the recusal of my office is necessary.”
Kunzweiler said he is “satisfied that the investigations I have requested are under way” concerning the “serious issues and allegations raised by that memo.” He said the appointment of another district attorney is “not only proper but consistent with my ethical responsibilities.”
Pruitt said his office has been in communication with Kunzweiler as he assessed what steps to take in investigating Glanz’s office.
“I appreciate District Attorney Kunzweiler’s assistance as this matter is transitioned to another office,” Pruitt said. “I have confidence District Attorney Barris will be able to conduct a thorough and independent investigation to ensure the interests and concerns of citizens are addressed as it relates to the sheriff’s office.”
The judge assigned to Bates’ criminal case is also considering recusing himself due to possible conflicts of interest with Glanz’s office.
Tulsa County District Judge James Caputo disclosed in April that he worked at the sheriff’s office for seven years and that his daughter was also an employee there. Caputo said no one has asked him to recuse himself, but that he was considering it and that he “made a pledge that I would never shy away from any case assigned me.”
“While this case has been randomly assigned to me as the trial judge, I do not yet have jurisdiction of the case,” Caputo said at the time. “The case is currently set for preliminary hearing at which time a probably cause magistrate must determine if there is probable [cause] that a crime was committed and if there is probably cause that this defendant committed the alleged crime.”
Caputo cited his track record of impartiality in a case against Andrew Dennehy, who was tried for the shooting of a sheriff’s deputy.
“Neither party requested that I recuse in that case, knowing my relationship with the sheriff’s office,” Caputo said. “I tried this case to a jury verdict, a verdict that wasn’t appealed. This case demonstrated that no matter the parties, or victims may be, I can maintain [my] duty and be true to my oath.”

From Courthouse News.

Texas Gov. Greg Abbott Squashes Denton’s Fracking Ban

May 19, 2015
By David Lee
AUSTIN (CN) – Texas Gov. Greg Abbott on Monday signed a law barring Texas cities from regulating oil and gas drilling, effectively ending a voter-approved fracking ban in Denton.
House Bill 40 prohibits cities from enacting any ordinance “that bans, limits, or otherwise regulates an oil and gas operation within its boundaries or extraterritorial jurisdiction.”
The Texas House of Representatives approved the bill by state Rep. Drew Darby, R-San Angelo, in April, and the Senate followed early this month.
Darby said cities only the Texas Railroad Commission can regulate oil and gas drilling in Texas. The law “expressly preempts” cities from doing so.
“The Legislature recognizes that in order to continue this prosperity and the efficient management of a key industry in this state it is in the state ‘s interest to explicitly confirm the authority for regulation of oil and gas activities within the state,” the law states. “The Legislature intends that this Act expressly preempts regulation of oil and gas operations by municipalities and other political subdivisions that is already impliedly preempted by state law.”
Denton voters banned fracking there on Nov. 4, 2014, with 58 percent of the vote.
Hydraulic fracturing, or fracking, involves injecting pressurized fluid to break shale rocks to release natural gas. The practice is popular in the vast Barnett Shale in North Texas, as rising energy prices have made the expensive process more profitable.
Environmentalists say it can pollute aquifers and cause earthquakes.
Other cities in the region have tried to regulate fracking due to environmental concerns. Denton, pop. 123,000, northwest of Dallas, was the first city to ban it outright.
Lobbyists with the Texas Oil & Gas Association sued the city within hours of polls closing, claiming the ban violated the Texas Constitution.
The Texas General Land Office, led by George P. Bush, filed a similar lawsuit the same day in Travis County Court.
Denton has denied all of TXOGA’s allegations, saying the industry’s lawsuit fails to identify what state regulations “allegedly occupy the ‘entire field’ rendering the initiative ordinance preempted and unconstitutional.”
Denton blames fracking for conditions “subversive of public order,” calling the practice an “obstruction of public rights of the community as a whole.”
Abbott said the law helps protect private property owners, because “the heavy hand of local regulation deprive[s] them of their rights.”
“This law ensures that Texas avoids a patchwork quilt of regulations that differ from region to region, differ from county to county or city to city,” Abbott said Monday. “HB 40 strikes a meaningful and correct balance between local control and preserving the state’s authority to ensure that regulations are even-handed and do not hamper job creation.”
Environmental advocate Earthworks disagrees, claiming the law forces every Texas city wanting “common sense limits on oil and gas development” to show that their rules are “commercially reasonable”.
Earthworks intervened in TXOGA”s lawsuit on Denton’s behalf in December, saying it would “provide a vigorous defense of the legality and enforceability” of the ban.
Adam Briggle, president of the Denton Drilling Awareness Group and a leader of Frack Free Denton, said Abbott “just declared that industry profits are more important than our health, our homes and our kids.”
Earthjustice attorney Deborah Goldberg said state lawmakers “capitulated to the greedy but powerful oil and gas industry at the expense of their own constituents’ health, well-being and property rights.”
“The Texas courts have upheld a long tradition of local control, so the Governor and the Legislature took matters into their own hands,” Goldberg said. “We have been proud to represent the proponents of Denton’s ban, and we know they will regroup and fight back against this legislative overreach.”

From Courthouse News.

No-Bill in Texas Policeman’s Killing of Mexican Immigrant

May 19, 2015
By David Lee
FORT WORTH (CN) – A Texas grand jury declined to indict a white police officer who shot to death an unarmed, undocumented Mexican immigrant during a traffic stop, sparking protests in two countries.
A Tarrant County grand jury no-billed Grapevine police Officer Robert W. Clark, Tarrant County District Attorney Sharen Wilson said Monday.
Clark killed Ruben Garcia Villalpando, 31, of North Richland Hills during a traffic stop on Feb. 20 on the shoulder of Texas State Highway 121 in Euless.
Police said Clark followed Garcia’s vehicle in Grapevine while investigating a burglar alarm in a high-speed chase.
District Attorney Wilson released an edited, 6-minute long dashcam video of the chase and traffic stop immediately after the grand jury’s decision.
It shows Garcia with his hands on his head after he leaves his vehicle, but he ignores Clark’s repeated shouts to stay near the back of his vehicle and slowly walks towards the police officer.
Garcia purportedly asks Clark if he is going to kill him and Clark responds that he will not. Clark can be heard asking his dispatcher to “step it up” because Garcia is saying “kill me.”
Soon after Garcia walks out of frame on the driver’s side of Clark’s vehicle, two gunshots are heard. Garcia died from two gunshot wounds to the chest.
An autopsy revealed that Garcia had a blood alcohol level that was twice the legal limit, Grapevine Police Chief Eddie Salame said.
Salame expressed frustration at having to wait to release the dashcam video until the grand jury weighed in.
“It has been very frustrating to listen to people mischaracterize this incident while our department honored the request of the Tarrant County District Attorney not to release the video until it could be presented to the grand jury,” Salame said in a statement. “The dashcam video tells a very different story from the one the public has been hearing.”
The shooting and investigation came in the midst of a fierce national debate over police brutality, racial profiling and failure to prosecute police. Protesters have expressed outrage over police killings of unarmed minority men in Ferguson, Mo.; New York City; North Charleston, S.C.; Baltimore and Tulsa.
The Consulate General of Mexico in Dallas quickly became involved in Garcia’s case, expressing anger that the city had not notified the consul of the death of a Mexican citizen.
The consulate issued a statement criticizing Clark for a “disproportionate use of lethal force” that “erodes the trust that should exist between the authorities and the communities in which they operate.”
The Mexican government has asked for a federal investigation of the shooting.
Garcia leaves behind four children and a wife. The family’s attorney, Domingo Garcia in Dallas, said he plans to file a federal lawsuit against the city and Clark. He said the grand jury’s no-bill was not a surprise because police officers are rarely indicted for killing civilians.
“There is a double standard that applies,” Domingo Garcia said at a news conference. “Police are given the benefit of doubt; they are basically given a license to use deadly force and with little accountability.”
The consul noted the dashcam video was edited and asked why it did not show the actual shooting. He cited a video recorded by a passing motorist that shows Garcia lying in front of Clark’s vehicle, not to the side as the edited dashcam video indicates.
“From a layperson’s perspective, there is a discrepancy,” Consul Garcia said. “We want that dashcam video to be authenticated and revised.”
Wilson said her office declined to issue a recommendation to the grand jury during its two weeks of deliberation.
“This office is committed to providing justice for all residents of Tarrant County, and ensuring the constitutional right to unbiased consideration,” Wilson said in a statement. “The ruling on this case was made by an impartial grand jury of Tarrant County citizens based solely on the facts, and we respect the decision of the citizens.”
Clark’s attorney, Jim Lane in Fort Worth, said the police officer was not aware Garcia was unarmed until after the shooting.
“The only two things that soldiers and street cops can rely on is their instincts and their training,” Lane told the Fort Worth Star-Telegram. “When they don’t follow their instincts and their training, we end up going to that officer’s funeral.
“It’s always a tragedy when an officer takes a life. No one is ever sure what they could have done better. You have to take the facts as they are presented. … One shove out in the middle of that traffic, and the officer could have been killed. Our experts said Clark probably waited too long before using deadly force.”

From Courthouse News.